Monday, September 15, 2008

Closed for business

A public meeting this Thursday at the Convention Centre is a rare instance of Londoners being afforded an opportunity to contribute suggestions on the future of London Hydro, a city-owned power utility whose primary practises are governed almost exclusively elsewhere by provincial agencies. But the exercise in public participation is likely to end up as purely symbolic as the public's actual stake in the utility's management, as Councillors have already invested themselves heavily in the demagogic appeal of local ownership and placement, effectively deciding to veto any sale or any relocation of the utility's head office through merger (PDF). From the London Free Press:

Whatever happens, local politicians say, head office must be in London, jobs must stay here and the city must retain control.
Unfortunately for Londoners, preemptive rejection of a full sale on the grounds of such feeble sentimental clichés dismisses opportunities both for taxpayers as well as for Council to take a responsible approach to its debt and infrastructure problems by raising revenues and discharging liabilities from its own bloated assets.

Contrary to the lucrative suggestion by the London Free Press that the utility "pumps $6.2 million a year into city coffers," London Hydro yields the City only $2 million in annual dividends — a strictly modest return on assets recently valued at $246 million. The remainder is interest paid to the City on a loan, an obligation that will either remain or be discharged in any event of a sale. More importantly to taxpayers, much of the $30 million that the City claims is needed annually for maintenance and building of basic infrastructure can be obtained from spending on debt-servicing obligations that reached $59.8 million in 2008 alone. The savings from these costs would likely approach the $30 million annual figure alone by applying the proceeds of a sale of London Hydro to the City's $350 million debt, and would certainly far exceed the annual dividend. Council's principle consideration if it wishes to be seen as a responsible steward of London's finances should only be obtaining the best price for London Hydro's assets — other options under discussion, including mergers with or acquisition of smaller utilities, will net no real difference to taxpayers.

Neither local control nor ownership suggest themselves as inherent benefits to a public that is generally disinterested in a utility's operations except to quietly receive service without intrusion or undue notice. Council in any case directs itself and staff to act almost strictly as a disinterested stakeholder to an independent London Hydro executive in day-to-day operations, a hands-off approach that minimizes politicization of the utility's operations. So why now? Would Londoners even notice a difference in service or value from another publicly-owned utility whose head office is elsewhere, or from a privately-owned one for that matter?

Not likely, and no suggestions to the contrary have ever been made even by politicians. The value to the public of public ownership is always only symbolic, and in the case of a utility on whose operations the public has no ordinary influence or impact except as a customer, it is strictly so. And when the representation of the symbol is London's own Council, it's a very weak symbol to begin with.